step method is followed with regard to
Answers
Answer:
The second method of allocating service department costs is the step method. This method allocates service costs to the operating departments and other service departments in a sequential process. The sequence of allocation generally starts with the service department that has incurred the greatest costs. After this department’s costs have been allocated, the service department with the next highest costs has its costs allocated, and so forth until the service department with the lowest costs has had its costs allocated. Costs are not allocated back to a department that has already had all of its costs allocated.
Answer:
Step method in cost accounting is followed with regard to allocation of department costs.
Explanation:
Step method is the method of allocating service department's costs to other service departments, as well as to operating departments, in a sequential manner. The sequence typically starts with the service department .Costs are allocated sequentially, from the largest consumer of services to the smallest, and in tabular form, the calculation creates a stepped table.
The step method differs from other methods in that it enables allocation of service department costs to other service departments, as well as to operating departments.